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Business Ethics 2016 - QUIZ & ANSWERS (9) - Formation and Requirements of Contracts

Business Ethics 2016

BUSINESS ETHICS 2016

Case study guides and test bank and answer keys (2016)

The Legal Environment of Business and Online Commerce, 8e (Cheeseman)

 

 

 

 

The Legal Environment of Business and Online Commerce, 8e (Cheeseman)

Chapter 9   Formation and Requirements of Contracts

 

1) Which of the following is acceptable consideration for a contract?

  1. A) a penalty
  2. B) an arrest
  3. C) a sentence
  4. D) money

Answer:  D

Diff: 1

Skill:  Legal Concepts

LO:  9.1 Define contract and list the elements necessary to form valid traditional contracts and e-contracts.

AACSB:  Analytical thinking

Classification:  Concept

 

2) Two brothers, Sam and Jim, were fighting over the division of their ancestral property. After ten years of legal battle, a frustrated Sam contacted a powerful politician who subjected Jim to extreme duress, forcing him to sign a contract in favor of Sam. When Sam takes this contract to court, the contract will be declared ________.

  1. A) voidable
  2. B) void
  3. C) null
  4. D) unenforceable

Answer:  A

Diff: 3

Skill:  Factual Application

LO:  9.1 Define contract and list the elements necessary to form valid traditional contracts and e-contracts.

AACSB:  Application of knowledge

Classification:  Application

 

 

3) A contract is a(n) ________ contract if the offeror's promise is answered with the offeree's promise of acceptance.

  1. A) voidable
  2. B) executed
  3. C) unilateral
  4. D) bilateral

Answer:  D

Diff: 1

Skill:  Legal Concepts

LO:  9.1 Define contract and list the elements necessary to form valid traditional contracts and e-contracts.

AACSB:  Analytical thinking

Classification:  Concept

 

4) Windsor, the owner of Windsor's Sandwiches, contacts Gary, a new supplier. He promises Gary that he will pay him $375 if Gary delivers 20 pounds of cheese the following morning. Gary promises to make the delivery as requested by Windsor. This creates a(n) ________ contract between them.

  1. A) bilateral
  2. B) unilateral
  3. C) executed
  4. D) voidable

Answer:  A

Diff: 2

Skill:  Factual Application

LO:  9.1 Define contract and list the elements necessary to form valid traditional contracts and e-contracts.

AACSB:  Application of knowledge

Classification:  Application

 

5) A contract is ________ if the offeror's offer can be accepted only by the performance of an act by the offeree.

  1. A) executed
  2. B) executory
  3. C) unilateral
  4. D) bilateral

Answer:  C

Diff: 1

Skill:  Legal Concepts

LO:  9.1 Define contract and list the elements necessary to form valid traditional contracts and e-contracts.

AACSB:  Analytical thinking

Classification:  Concept

 

6) Yvonne finds a carpenter to do some repairs for her house and tells him that if he finishes the job by Saturday, she will pay him $1,000. Yvonne's offer creates a(n) ________ contract.

  1. A) executed
  2. B) unilateral
  3. C) executory
  4. D) bilateral

Answer:  B

Diff: 2

Skill:  Factual Application

LO:  9.1 Define contract and list the elements necessary to form valid traditional contracts and e-contracts.

AACSB:  Application of knowledge

Classification:  Application

 

 

7) Martha contacts a bakery to get a cake for her son's birthday party. She tells the baker that she will pay him $150 for the cake if he delivers the cake on Friday evening. If the baker does not deliver the cake on Friday evening, which of the following is accurate?

  1. A) Martha can sue the baker but cannot recover damages.
  2. B) Martha can sue the baker and recover $150 in damages.
  3. C) Martha cannot sue the baker.
  4. D) The baker must pay Martha $150 plus the cost of a replacement cake, as he entered into a verbal contract with her and did not perform his legal obligation.

Answer:  C

Diff: 2

Skill:  Factual Application

LO:  9.1 Define contract and list the elements necessary to form valid traditional contracts and e-contracts.

AACSB:  Application of knowledge

Classification:  Application

 

8) Alan tells Sherry that he will pay her $5,000 if she runs the Boston Marathon. Once Sherry starts running the marathon, Alan ________.

  1. A) can revoke the contract, as an informal verbal agreement is not legally binding
  2. B) can revoke the contract, provided he does so before she completes the marathon
  3. C) can reduce the amount of money he offered her, provided he does so before she completes the marathon
  4. D) cannot revoke the contract

Answer:  D

Diff: 2

Skill:  Factual Application

LO:  9.1 Define contract and list the elements necessary to form valid traditional contracts and e-contracts.

AACSB:  Application of knowledge

Classification:  Application

 

9) Which of the following is an example of an informal contract?

  1. A) a recognizance
  2. B) a lease
  3. C) a letter of credit
  4. D) a check

Answer:  B

Diff: 2

Skill:  Legal Concepts

LO:  9.1 Define contract and list the elements necessary to form valid traditional contracts and e-contracts.

AACSB:  Analytical thinking

Classification:  Concept

 

10) What is a recognizance?

  1. A) a sealed document that contains a formal contract whose contents are known to both parties and the referee who supervised its signing
  2. B) a party's agreement to pay a sum of money if another person does not pay it
  3. C) a party's acknowledgement in court that he or she is not liable to pay money if a certain event occurs
  4. D) a sealed document that contains an informal contract whose contents are known only to the parties

Answer:  B

Diff: 2

Skill:  Legal Concepts

LO:  9.1 Define contract and list the elements necessary to form valid traditional contracts and e-contracts.

AACSB:  Analytical thinking

Classification:  Concept

 

11) Provision of services qualifies as consideration for an enforceable contract.

Answer:  TRUE

Diff: 1

Skill:  Legal Concepts

LO:  9.1 Define contract and list the elements necessary to form valid traditional contracts and e-contracts.

AACSB:  Analytical thinking

Classification:  Concept

 

12) A contract is a bilateral contract if the offeror's promise is answered with the offeree's promise of acceptance.

Answer:  TRUE

Diff: 1

Skill:  Legal Concepts

LO:  9.1 Define contract and list the elements necessary to form valid traditional contracts and e-contracts.

AACSB:  Analytical thinking

Classification:  Concept

 

13) An act of performance is necessary to create a bilateral contract.

Answer:  FALSE

Diff: 1

Skill:  Legal Concepts

LO:  9.1 Define contract and list the elements necessary to form valid traditional contracts and e-contracts.

AACSB:  Analytical thinking

Classification:  Concept

 

 

14) A unilateral contract can be accepted without the performance of an act by the offeree.

Answer:  FALSE

Diff: 2

Skill:  Legal Concepts

LO:  9.1 Define contract and list the elements necessary to form valid traditional contracts and e-contracts.

AACSB:  Analytical thinking

Classification:  Concept

 

15) An offer to create a unilateral contract cannot be accepted by a promise to perform.

Answer:  TRUE

Diff: 1

Skill:  Legal Concepts

LO:  9.1 Define contract and list the elements necessary to form valid traditional contracts and e-contracts.

AACSB:  Analytical thinking

Classification:  Concept

 

16) An offer to create a unilateral contract can be revoked by the offeror any time prior to the offeree's performance of the requested act.

Answer:  TRUE

Diff: 1

Skill:  Legal Concepts

LO:  9.1 Define contract and list the elements necessary to form valid traditional contracts and e-contracts.

AACSB:  Analytical thinking

Classification:  Concept

 

17) In a recognizance, a party agrees to pay a specified sum of money if another party does not pay it.

Answer:  TRUE

Diff: 1

Skill:  Legal Concepts

LO:  9.1 Define contract and list the elements necessary to form valid traditional contracts and e-contracts.

AACSB:  Analytical thinking

Classification:  Concept

 

18) A(n) ________ contract is a contract entered into by way of an exchange of promises between the parties.

Answer:  bilateral

Diff: 1

Skill:  Legal Concepts

LO:  9.1 Define contract and list the elements necessary to form valid traditional contracts and e-contracts.

AACSB:  Analytical thinking

Classification:  Concept

 

19) A(n) ________ contract is only valid once the offeree performs the requested act.

Answer:  unilateral

Diff: 1

Skill:  Legal Concepts

LO:  9.1 Define contract and list the elements necessary to form valid traditional contracts and e-contracts.

AACSB:  Analytical thinking

Classification:  Concept

20) Explain the basic requirements that must be met for a contract to be enforceable.

Answer:  The requirements for a contract to be enforceable are: 1) Agreement. To have an enforceable contract, there must be an agreement between the parties. This requires an offer by the offeror and an acceptance of the offer by the offeree. There must be mutual assent by the parties. 2) Consideration. A promise must be supported by a bargained-for consideration that is legally sufficient. Money, personal property, real property, provision of services, and the like, qualify as consideration. 3) Contractual capacity. The parties to a contract must have contractual capacity for the contract to be enforceable against them. Contracts cannot be enforced against parties who lacked contractual capacity when they entered into the contracts. 4) Lawful object. The object of a contract must be lawful. Most contracts have a lawful object. However, contracts that have an illegal object are void and will not be enforced.

Diff: 2

Skill:  Legal Concepts

LO:  9.1 Define contract and list the elements necessary to form valid traditional contracts and e-contracts.

AACSB:  Analytical thinking

Classification:  Concept

 

21) What are the possible problems that can come up in a unilateral contract?

Answer:  In a unilateral contract, problems arise if the offeror attempts to revoke an offer after the offeree has begun performance. Generally, an offer to create a unilateral contract can be revoked by the offeror any time prior to the offeree's performance of the requested act. However, the offer cannot be revoked if the offeree has begun or has substantially completed performance.

Diff: 2

Skill:  Legal Concepts

LO:  9.1 Define contract and list the elements necessary to form valid traditional contracts and e-contracts.

AACSB:  Analytical thinking

Classification:  Concept

 

 

22) Which of the following is a necessary condition for a contract to be considered valid?

  1. A) It can be voided by both parties.
  2. B) It can be voided by one of the parties.
  3. C) It is enforceable by both parties.
  4. D) It is enforceable by at least one of the parties.

Answer:  D

Diff: 2

Skill:  Legal Concepts

LO:  9.2 Describe and distinguish among valid, void, voidable, and unenforceable contracts.

AACSB:  Analytical thinking

Classification:  Concept

 

23) While Harry was intoxicated, he sold his car to Ben for substantially less than its fair market value. This contract is considered ________.

  1. A) valid
  2. B) voidable
  3. C) void
  4. D) unenforceable

Answer:  B

Diff: 2

Skill:  Factual Application

LO:  9.2 Describe and distinguish among valid, void, voidable, and unenforceable contracts.

AACSB:  Application of knowledge

Classification:  Application

 

24) Noelle uses blackmail to force Jeff to sign a contract for the sale of his home. This contract is ________.

  1. A) unenforceable
  2. B) valid
  3. C) void
  4. D) voidable

Answer:  D

Diff: 2

Skill:  Legal Concepts

LO:  9.2 Describe and distinguish among valid, void, voidable, and unenforceable contracts.

AACSB:  Analytical thinking

Classification:  Concept

 

 

25) If a contract is required to be in writing under the Statute of Frauds but is not, the contract is ________.

  1. A) executed
  2. B) unilateral
  3. C) unenforceable
  4. D) formal

Answer:  C

Diff: 1

Skill:  Legal Concepts

LO:  9.2 Describe and distinguish among valid, void, voidable, and unenforceable contracts.

AACSB:  Analytical thinking

Classification:  Concept

 

26) A contract that has been fully performed by one party but not by the other party is a(n) ________ contract.

  1. A) void
  2. B) voidable
  3. C) executory
  4. D) executed

Answer:  C

Diff: 1

Skill:  Legal Concepts

LO:  9.2 Describe and distinguish among valid, void, voidable, and unenforceable contracts.

AACSB:  Analytical thinking

Classification:  Concept

27) Elizabeth signs a contract to purchase a new car from Quickcash Motors. She has not yet paid for the car, and Quickcash Motors has not yet delivered the car to Elizabeth. This is an example of a(n) ________ contract.

  1. A) unenforceable
  2. B) executory
  3. C) void
  4. D) executed

Answer:  B

Diff: 2

Skill:  Factual Application

LO:  9.2 Describe and distinguish among valid, void, voidable, and unenforceable contracts.

AACSB:  Application of knowledge

Classification:  Application

 

 

28) In terms of a contract's enforcement, which of the following is true?

  1. A) A contract is only considered valid if it is enforceable by both parties.
  2. B) Parties may voluntarily perform a contract that is unenforceable.
  3. C) An unenforceable contract allows at least one party the option to void his or her contract obligations.
  4. D) Void contracts are enforceable in cases involving mutual mistake.

Answer:  B

Diff: 2

Skill:  Legal Concepts

LO:  9.2 Describe and distinguish among valid, void, voidable, and unenforceable contracts.

AACSB:  Analytical thinking

Classification:  Concept

 

29) An oral agreement to purchase a neighbor's bicycle for $250 is a(n) ________ contract.

  1. A) void
  2. B) voidable
  3. C) implied
  4. D) express

Answer:  D

Diff: 2

Skill:  Legal Concepts

LO:  9.2 Describe and distinguish among valid, void, voidable, and unenforceable contracts.

AACSB:  Analytical thinking

Classification:  Concept

 

30) Which of the following elements must be established to create an implied-in-fact contract?

  1. A) The plaintiff provided property or services to the defendant gratuitously.
  2. B) The defendant accepted the plaintiff's property or services as payment for an illegal activity.
  3. C) The plaintiff made the defendant sign the contract and then changed its terms, identifying the new terms as "retroactively implied."
  4. D) The defendant was given an opportunity to reject the plaintiff's property or services but failed to do so.

Answer:  D

Diff: 2

Skill:  Legal Concepts

LO:  9.2 Describe and distinguish among valid, void, voidable, and unenforceable contracts.

AACSB:  Analytical thinking

Classification:  Concept

 

 

31) In terms of the doctrine of quasi-contract, which of the following statements is true?

  1. A) The agreement between the parties to a quasi-contract is inferred from their conduct.
  2. B) It is an equitable doctrine intended to prevent unjust enrichment.
  3. C) It only applies to situations involving an enforceable contract between the parties.
  4. D) It allows a court to award damages to the defendant even though no actual contract existed between the parties.

Answer:  B

Diff: 2

Skill:  Legal Concepts

LO:  9.2 Describe and distinguish among valid, void, voidable, and unenforceable contracts.

AACSB:  Analytical thinking

Classification:  Concept

 

32) Stella is injured in a car accident and is transported to the local hospital by emergency personnel. She subsequently passes into a coma. The doctors and other staff perform the necessary medical procedures to save her life. Stella recovers after two months and is discharged from the hospital. Under the doctrine of ________ contract, Stella must pay the hospital for its services.

  1. A) implied-in-fact
  2. B) express
  3. C) quasi-
  4. D) formal

Answer:  C

Diff: 2

Skill:  Factual Application

LO:  9.2 Describe and distinguish among valid, void, voidable, and unenforceable contracts.

AACSB:  Application of knowledge

Classification:  Application

 

33) Kyle goes to a used automobile dealership to buy a truck. He signs an agreement with the dealership that includes a description of the truck, its price, and other details. This is an example of a(n) ________ contract.

  1. A) express
  2. B) unilateral
  3. C) implied-in-law
  4. D) implied-in-fact

Answer:  A

Diff: 2

Skill:  Factual Application

LO:  9.2 Describe and distinguish among valid, void, voidable, and unenforceable contracts.

AACSB:  Application of knowledge

Classification:  Application

 

34) Which of the following would likely give rise to a quasi-contract?

  1. A) an employee receiving his or her paycheck monthly
  2. B) two companies signing a business agreement of indefinite duration
  3. C) an unconscious man being treated in a hospital emergency room
  4. D) a woman hiring a caterer only after the caterer promises to deliver the food on time

Answer:  C

Diff: 3

Skill:  Factual Application

LO:  9.2 Describe and distinguish among valid, void, voidable, and unenforceable contracts.

AACSB:  Application of knowledge

Classification:  Application

 

35) A voidable contract is also termed as an unenforceable contract.

Answer:  FALSE

Diff: 1

Skill:  Legal Concepts

LO:  9.2 Describe and distinguish among valid, void, voidable, and unenforceable contracts.

AACSB:  Analytical thinking

Classification:  Concept

 

36) A contract that has been fully performed by both sides is called an executory contract.

Answer:  FALSE

Diff: 1

Skill:  Legal Concepts

LO:  9.2 Describe and distinguish among valid, void, voidable, and unenforceable contracts.

AACSB:  Analytical thinking

Classification:  Concept

 

37) An express contract can be stated orally.

Answer:  TRUE

Diff: 1

Skill:  Legal Concepts

LO:  9.2 Describe and distinguish among valid, void, voidable, and unenforceable contracts.

AACSB:  Analytical thinking

Classification:  Concept

 

38) To create an implied-in-fact contract, it must be established that the plaintiff provided the property or services gratuitously.

Answer:  FALSE

Diff: 2

Skill:  Legal Concepts

LO:  9.2 Describe and distinguish among valid, void, voidable, and unenforceable contracts.

AACSB:  Analytical thinking

Classification:  Concept

 

 

39) An implied-in-fact contract is a contract in which agreement between parties has been inferred from their conduct.

Answer:  TRUE

Diff: 1

Skill:  Legal Concepts

LO:  9.2 Describe and distinguish among valid, void, voidable, and unenforceable contracts.

AACSB:  Analytical thinking

Classification:  Concept

 

40) A contract in which an agreement between the parties is inferred from their conduct is known as a(n) ________ contract.

Answer:  implied-in-fact

Diff: 1

Skill:  Legal Concepts

LO:  9.2 Describe and distinguish among valid, void, voidable, and unenforceable contracts.

AACSB:  Analytical thinking

Classification:  Concept

 

41) A(n) ________ contract is a contract that has not been fully performed by either or both sides.

Answer:  executory

Diff: 1

Skill:  Legal Concepts

LO:  9.2 Describe and distinguish among valid, void, voidable, and unenforceable contracts.

AACSB:  Analytical thinking

Classification:  Concept

 

42) A contract is said to be ________ when one or both parties have the option to void the contractual obligations.

Answer:  voidable

Diff: 1

Skill:  Legal Concepts

LO:  9.2 Describe and distinguish among valid, void, voidable, and unenforceable contracts.

AACSB:  Analytical thinking

Classification:  Concept

 

43) A(n) ________ is an equitable doctrine whereby a court may award monetary damages to a plaintiff for providing work or services to a defendant even though no actual contract existed.

Answer:  quasi-contract

Diff: 1

Skill:  Legal Concepts

LO:  9.2 Describe and distinguish among valid, void, voidable, and unenforceable contracts.

AACSB:  Analytical thinking

Classification:  Concept

 

44) Compare valid, void, voidable and unenforceable contracts.

Answer: 

1.Valid contract. A valid contract meets all the essential elements to establish a contract. In other words, it (1) consists of an agreement between the parties, (2) is supported by legally sufficient consideration, (3) is between parties with contractual capacity, and (4) accomplishes a lawful object. A valid contract is enforceable by at least one of the parties.

  1. Void contract. A void contract has no legal effect. It is as if no contract had ever been created. A contract to commit a crime is void. If a contract is void then neither party is obligated to perform the contract and neither party can enforce the contract.
  2. Voidable contract. A voidable contract is a contract in which at least one party has the option to void his or her contractual obligations. If the contract is voided, both parties are released from their obligations under the contract. If the party with the option chooses to ratify the contract, both parties must fully perform their obligations.
  3. Unenforceable contract. With an unenforceable contract, there is some legal defense to the enforcement of the contract. If a contract is required to be in writing under the Statute of Frauds but is not in writing, the contract is unenforceable.

Diff: 2

Skill:  Legal Concepts

LO:  9.2 Describe and distinguish among valid, void, voidable, and unenforceable contracts.

AACSB:  Analytical thinking

Classification:  Concept

 

45) The ________ states that the intent to contract is judged by the reasonable person standard and not by the subjective intent of the parties.

  1. A) objective theory of contracts
  2. B) common law of contracts
  3. C) Restatement of the Law of Contracts
  4. D) Restatement (Second) of Contracts

Answer:  A

Diff: 1

Skill:  Legal Concepts

LO:  9.3 Describe offer, acceptance, and consideration.

AACSB:  Analytical thinking

Classification:  Concept

 

46) According to the objective theory of contracts, the intent to enter into a contract is judged by the ________.

  1. A) doctrine of equity
  2. B) legality of the contract
  3. C) reasonable person standard
  4. D) common law of contracts

Answer:  C

Diff: 1

Skill:  Legal Concepts

LO:  9.3 Describe offer, acceptance, and consideration.

AACSB:  Analytical thinking

Classification:  Concept

 

47) Which of the following is true for an auction with reserve?

  1. A) The seller retains the right to refuse the highest bid and withdraw the goods from sale.
  2. B) An invitation to make an offer is not allowed.
  3. C) An auctioned item cannot be withdrawn from the auction after an offer has been made.
  4. D) A bid cannot be withdrawn and is legally binding from the moment it is made.

Answer:  A

Diff: 1

Skill:  Legal Concepts

LO:  9.3 Describe offer, acceptance, and consideration.

AACSB:  Analytical thinking

Classification:  Concept

 

48) Which of the following is true for an auction without reserve?

  1. A) The bidder is considered the offeror.
  2. B) The seller need not accept the highest bid.
  3. C) The auctioned item cannot be withdrawn from sale.
  4. D) The auctioneer is not allowed to establish a minimum bid.

Answer:  C

Diff: 1

Skill:  Legal Concepts

LO:  9.3 Describe offer, acceptance, and consideration.

AACSB:  Analytical thinking

Classification:  Concept

 

49) Which of the following statements is true about a counteroffer?

  1. A) An offeree who makes a counteroffer is still considered the offeree.
  2. B) A counteroffer terminates the existing offer.
  3. C) A counteroffer can only be made by the original offeror.
  4. D) A counteroffer is effective even before it has been received by the original offeror.

Answer:  B

Diff: 1

Skill:  Legal Concepts

LO:  9.3 Describe offer, acceptance, and consideration.

AACSB:  Analytical thinking

Classification:  Concept

 

 

50) Which of the following is true of an option contract?

  1. A) If the offeree chooses not to buy the property, the consideration paid must be returned.
  2. B) The consideration paid for the option cannot be applied to the sale price.
  3. C) The death or incompetency of either party terminates an option contract.
  4. D) The offer cannot be revoked during the option period.

Answer:  D

Diff: 2

Skill:  Legal Concepts

LO:  9.3 Describe offer, acceptance, and consideration.

AACSB:  Analytical thinking

Classification:  Concept

51) The ________ rule states that acceptance is effective when it is dispatched, even if it is lost in transmission.

  1. A) silence-as-acceptance
  2. B) mirror image
  3. C) mailbox
  4. D) mutual assent

Answer:  C

Diff: 1

Skill:  Legal Concepts

LO:  9.3 Describe offer, acceptance, and consideration.

AACSB:  Analytical thinking

Classification:  Concept

 

52) A contract is said to have legal value if ________.

  1. A) both the promisor and the promisee receive a legal benefit
  2. B) the promisor suffers a legal detriment
  3. C) the promisee suffers a legal detriment
  4. D) the promisee receives a legal benefit

Answer:  C

Diff: 1

Skill:  Legal Concepts

LO:  9.3 Describe offer, acceptance, and consideration.

AACSB:  Analytical thinking

Classification:  Concept

 

 

53) Which of the following is true of a gift promise?

  1. A) A gift promise can be enforced by a court of law.
  2. B) A completed gift promise cannot be cancelled for lack of consideration.
  3. C) A gift promise contains mutual consideration.
  4. D) The promisee can take legal action if the promisor does not fulfill the gift promise.

Answer:  B

Diff: 1

Skill:  Legal Concepts

LO:  9.3 Describe offer, acceptance, and consideration.

AACSB:  Analytical thinking

Classification:  Concept

 

54) Why does an illusory contract lack consideration?

  1. A) because the consideration promised is unlawful and therefore void
  2. B) because the person promises to perform an act or do something he is already under an obligation to do
  3. C) because one or both of the parties can choose not to perform their contractual obligations
  4. D) because the compensation paid is for work done in the past

Answer:  C

Diff: 1

Skill:  Legal Concepts

LO:  9.3 Describe offer, acceptance, and consideration.

AACSB:  Analytical thinking

Classification:  Concept

 

55) In terms of contractual capacity, what is the most commonly-recognized age of majority?

  1. A) 15
  2. B) 16
  3. C) 18
  4. D) 21

Answer:  C

Diff: 2

Skill:  Legal Concepts

LO:  9.3 Describe offer, acceptance, and consideration.

AACSB:  Analytical thinking

Classification:  Concept

 

 

56) In terms of the infancy doctrine, which of the following is true?

  1. A) A minor must honor a contract he or she entered into with an adult if the minor had sufficient mental capacity when the contract was formed.
  2. B) A minor can disaffirm a contract he or she entered into with an adult.
  3. C) A minor cannot enter into a legal contract with another minor.
  4. D) A minor cannot elect to enforce a contract he or she has entered into with an adult.

Answer:  B

Diff: 2

Skill:  Legal Concepts

LO:  9.3 Describe offer, acceptance, and consideration.

AACSB:  Analytical thinking

Classification:  Concept

 

57) Which of the following is true of a contract with an adjudged insane person?

  1. A) The adjudged insane person is bound by the terms of the contract.
  2. B) The contract is void.
  3. C) Only the competent party can enforce the contract.
  4. D) The competent party is legally obligated to uphold the contract.

Answer:  B

Diff: 2

Skill:  Legal Concepts

LO:  9.3 Describe offer, acceptance, and consideration.

AACSB:  Analytical thinking

Classification:  Concept

 

58) Which of the following is true of a contract in which one of the parties is insane but not adjudged insane?

  1. A) The contract is voidable by the competent party.
  2. B) The contract is only voidable by the insane person.
  3. C) Only the court-appointed legal guardian of the insane person can modify the contract.
  4. D) The sane person must be placed in status quo if the insane person voids the contract.

Answer:  B

Diff: 2

Skill:  Legal Concepts

LO:  9.3 Describe offer, acceptance, and consideration.

AACSB:  Analytical thinking

Classification:  Concept

59) Unless otherwise expressly stated, an auction is considered an auction without reserve.

Answer:  FALSE

Diff: 1

Skill:  Legal Concepts

LO:  9.3 Describe offer, acceptance, and consideration.

AACSB:  Analytical thinking

Classification:  Concept

 

 

60) In auction without reserve, the seller is the offeree.

Answer:  FALSE

Diff: 1

Skill:  Legal Concepts

LO:  9.3 Describe offer, acceptance, and consideration.

AACSB:  Analytical thinking

Classification:  Concept

 

61) A rejection of an offer is not effective until it is actually received by the offeror.

Answer:  TRUE

Diff: 1

Skill:  Legal Concepts

LO:  9.3 Describe offer, acceptance, and consideration.

AACSB:  Analytical thinking

Classification:  Concept

 

62) A counteroffer is considered a rejection of the original offer.

Answer:  TRUE

Diff: 1

Skill:  Legal Concepts

LO:  9.3 Describe offer, acceptance, and consideration.

AACSB:  Analytical thinking

Classification:  Concept

 

63) An option contract is terminated upon the death of the offeror.

Answer:  FALSE

Diff: 1

Skill:  Legal Concepts

LO:  9.3 Describe offer, acceptance, and consideration.

AACSB:  Analytical thinking

Classification:  Concept

 

64) To meet the mirror image rule, the offeree must accept the terms of the offer without modification.

Answer:  TRUE

Diff: 1

Skill:  Legal Concepts

LO:  9.3 Describe offer, acceptance, and consideration.

AACSB:  Analytical thinking

Classification:  Concept

 

 

65) Under the mailbox rule, an acceptance is only effective when it is received.

Answer:  FALSE

Diff: 1

Skill:  Legal Concepts

LO:  9.3 Describe offer, acceptance, and consideration.

AACSB:  Analytical thinking

Classification:  Concept

 

66) Consideration is defined as something of legal value given in exchange for termination of an offer.

Answer:  FALSE

Diff: 1

Skill:  Legal Concepts

LO:  9.3 Describe offer, acceptance, and consideration.

AACSB:  Analytical thinking

Classification:  Concept

 

67) A contract need not arise from a bargained-for exchange.

Answer:  FALSE

Diff: 1

Skill:  Legal Concepts

LO:  9.3 Describe offer, acceptance, and consideration.

AACSB:  Analytical thinking

Classification:  Concept

 

68) Illusory promises require both parties to perform their contractual obligations.

Answer:  FALSE

Diff: 1

Skill:  Legal Concepts

LO:  9.3 Describe offer, acceptance, and consideration.

AACSB:  Analytical thinking

Classification:  Concept

 

69) A preexisting duty is sufficient consideration to support a new contract.

Answer:  FALSE

Diff: 1

Skill:  Legal Concepts

LO:  9.3 Describe offer, acceptance, and consideration.

AACSB:  Analytical thinking

Classification:  Concept

 

 

70) Past consideration is sufficient consideration to support a new contract.

Answer:  FALSE

Diff: 1

Skill:  Legal Concepts

LO:  9.3 Describe offer, acceptance, and consideration.

AACSB:  Analytical thinking

Classification:  Concept

71) The infancy doctrine gives minors the right to disaffirm most contracts they have entered into with adults.

Answer:  TRUE

Diff: 1

Skill:  Legal Concepts

LO:  9.3 Describe offer, acceptance, and consideration.

AACSB:  Analytical thinking

Classification:  Concept

 

72) The infancy doctrine gives adults the right to disaffirm contracts they have entered into with minors.

Answer:  FALSE

Diff: 1

Skill:  Legal Concepts

LO:  9.3 Describe offer, acceptance, and consideration.

AACSB:  Analytical thinking

Classification:  Concept

 

73) Any contract entered into by a person who has been adjudged insane is void.

Answer:  TRUE

Diff: 1

Skill:  Legal Concepts

LO:  9.3 Describe offer, acceptance, and consideration.

AACSB:  Analytical thinking

Classification:  Concept

 

74) A person who has dealt with an insane person need not place that insane person in status quo if the contract is either void or voided by the insane person.

Answer:  FALSE

Diff: 1

Skill:  Legal Concepts

LO:  9.3 Describe offer, acceptance, and consideration.

AACSB:  Analytical thinking

Classification:  Concept

 

 

75) If an insane person who has not been adjudged insane enters into a contract, the contract is non-voidable by the insane person.

Answer:  FALSE

Diff: 1

Skill:  Legal Concepts

LO:  9.3 Describe offer, acceptance, and consideration.

AACSB:  Analytical thinking

Classification:  Concept

 

76) A person who disaffirms a contract based on intoxication must be returned to the status quo.

Answer:  TRUE

Diff: 1

Skill:  Legal Concepts

LO:  9.3 Describe offer, acceptance, and consideration.

AACSB:  Analytical thinking

Classification:  Concept

 

77) A person who disaffirms a contract based on intoxication is not legally obligated to return the consideration he or she received under the contract to the other party.

Answer:  FALSE

Diff: 1

Skill:  Legal Concepts

LO:  9.3 Describe offer, acceptance, and consideration.

AACSB:  Analytical thinking

Classification:  Concept

 

78) An offeror can ________ an offer by withdrawing the offer prior to its acceptance.

Answer:  revoke

Diff: 1

Skill:  Legal Concepts

LO:  9.3 Describe offer, acceptance, and consideration.

AACSB:  Analytical thinking

Classification:  Concept

 

79) A(n) ________ is a response by an offeree that contains terms and conditions different from or in addition to those of the offer.

Answer:  counteroffer

Diff: 1

Skill:  Legal Concepts

LO:  9.3 Describe offer, acceptance, and consideration.

AACSB:  Analytical thinking

Classification:  Concept

 

 

80) Under the mailbox rule, an acceptance is effective when ________.

Answer:  dispatched/mailed

Diff: 1

Skill:  Legal Concepts

LO:  9.3 Describe offer, acceptance, and consideration.

AACSB:  Analytical thinking

Classification:  Concept

 

81) The ________ rule states that the offeree must accept the terms of an offer as stated in the offer.

Answer:  mirror-image

Diff: 1

Skill:  Legal Concepts

LO:  9.3 Describe offer, acceptance, and consideration.

AACSB:  Analytical thinking

Classification:  Concept

 

82) A(n) ________ is a contract in which the original offeree pays consideration (usually money) in return for the original offeror giving consideration (time of the option period).

Answer:  option contract

Diff: 1

Skill:  Legal Concepts

LO:  9.3 Describe offer, acceptance, and consideration.

AACSB:  Analytical thinking

Classification:  Concept

83) ________ is defined as something of legal value given in exchange for a promise.

Answer:  Consideration

Diff: 1

Skill:  Legal Concepts

LO:  9.3 Describe offer, acceptance, and consideration.

AACSB:  Analytical thinking

Classification:  Concept

 

84) A contract into which parties enter but in which one or both of the parties can choose not to perform their contractual obligations is said to involve ________ promises.

Answer:  illusory

Diff: 1

Skill:  Legal Concepts

LO:  9.3 Describe offer, acceptance, and consideration.

AACSB:  Analytical thinking

Classification:  Concept

 

 

85) The infancy doctrine allows minors to ________ most contracts they have entered into with adults.

Answer:  disaffirm/cancel

Diff: 1

Skill:  Legal Concepts

LO:  9.3 Describe offer, acceptance, and consideration.

AACSB:  Analytical thinking

Classification:  Concept

 

86) Give an account of termination of an offer due to a lapse of time.

Answer:  An offer expires at the lapse of time of an offer. An offer may state that it is effective only until a certain date. Unless otherwise stated, the time period begins to run when the offer is actually received by the offeree and terminates when the stated time period expires. If no time is stated in an offer, the offer terminates after a "reasonable time," dictated by the circumstances.

Diff: 1

Skill:  Legal Concepts

LO:  9.3 Describe offer, acceptance, and consideration.

AACSB:  Analytical thinking

Classification:  Concept

 

87) Explain in brief the standards concerning contracts of mentally incompetent persons.

Answer:  The law protects people suffering from substantial mental incapacity from enforcement of contracts against them because such persons may not understand the consequences of their actions in entering into a contract. The law has developed two standards concerning contracts of mentally incompetent persons: (1) adjudged insane and (2) insane but not adjudged insane.

 

In certain cases, a relative, a loved one, or another interested party may institute a legal action to have someone declared legally (i.e., adjudged) insane. If, after evidence is presented at a formal judicial or administrative hearing, the person is adjudged insane, the court will make that person a ward of the court and appoint a guardian to act on that person's behalf. Any contract entered into by a person who has been adjudged insane is void. That is, no contract exists. The court-appointed guardian is the only one who has the legal authority to enter into contracts on behalf of the person who has been adjudged insane.

 

If no formal ruling has been made about a person's sanity but the person suffers from a mental impairment that makes him or her legally insane–that is, the person is insane but not adjudged insane–any contract entered into by this person is voidable by the insane person. Unless the other party does not have contractual capacity, he or she does not have the option to void the contract. A person who has dealt with an insane person must place that insane person in status quo if the contract is either void or voided by the insane person.

Diff: 2

Skill:  Legal Concepts

LO:  9.3 Describe offer, acceptance, and consideration.

AACSB:  Analytical thinking

Classification:  Concept

 

88) A(n) ________ is a contractual provision that relieves one or both of the parties to a contract from tort liability.

  1. A) contract of adhesion
  2. B) exculpatory clause
  3. C) duty of restitution
  4. D) fundamental breach

Answer:  B

Diff: 1

Skill:  Legal Concepts

LO:  9.4 Identify illegal contracts that are contrary to statutes and that violate public policy.

AACSB:  Analytical thinking

Classification:  Concept

89) A(n) ________ is a contract that courts refuse to enforce in part or at all because it is so oppressive or manifestly unfair as to be unjust.

  1. A) unconscionable contract
  2. B) contract of attrition
  3. C) contract in furtherance of trade
  4. D) quasi-contract

Answer:  A

Diff: 1

Skill:  Legal Concepts

LO:  9.4 Identify illegal contracts that are contrary to statutes and that violate public policy.

AACSB:  Analytical thinking

Classification:  Concept

 

90) Which of the following elements must be established for a contract to be deemed unconscionable?

  1. A) The weaker party did not enter the contract under duress.
  2. B) The parties had equal bargaining power.
  3. C) The dominant party justly used its bargaining power.
  4. D) The adhering party had no reasonable alternative.

Answer:  D

Diff: 2

Skill:  Legal Concepts

LO:  9.4 Identify illegal contracts that are contrary to statutes and that violate public policy.

AACSB:  Analytical thinking

Classification:  Concept

 

91) An exculpatory clause can relieve a party of liability for ordinary negligence.

Answer:  TRUE

Diff: 1

Skill:  Legal Concepts

LO:  9.4 Identify illegal contracts that are contrary to statutes and that violate public policy.

AACSB:  Analytical thinking

Classification:  Concept

 

92) Unconscionable contracts are sometimes found where there is a consumer contract that takes advantage of uneducated, poor, or elderly people who have been persuaded to enter into unfair contracts.

Answer:  TRUE

Diff: 1

Skill:  Legal Concepts

LO:  9.4 Identify illegal contracts that are contrary to statutes and that violate public policy.

AACSB:  Analytical thinking

Classification:  Concept

 

93) The Uniform Computer Information Transactions Act (UCITA) is a law applicable to all states and does not require a state legislature to adopt it as a statute for the state.

Answer:  FALSE

Diff: 1

Skill:  Legal Concepts

LO:  9.5 Describe e-commerce and define e-contract.

AACSB:  Analytical thinking

Classification:  Concept

 

94) The ________ establishes uniform legal rules for the formation and enforcement of electronic contracts and licenses.

Answer:  Uniform Computer Information Transactions Act (UCITA)

Diff: 1

Skill:  Legal Concepts

LO:  9.5 Describe e-commerce and define e-contract.

AACSB:  Analytical thinking

Classification:  Concept

 

95) Explain in brief the Uniform Computer Information Transactions Act (UCITA).

Answer:  The National Conference of Commissioners on Uniform State Laws (a group of lawyers, judges, and legal scholars) drafted the Uniform Computer Information Transactions Act (UCITA). The UCITA establishes uniform legal rules for the formation and enforcement of electronic contracts and licenses. The UCITA addresses most of the legal issues that are encountered while conducting e-commerce over the Internet. The UCITA is a model act that does not become law until a state legislature adopts it as a statute for the state. Although most states have not adopted the UCITA, the UCITA has served as a model for states that have enacted their own statutes that govern e-commerce. Because of the need for uniformity of e-commerce rules, states are attempting to adopt uniform laws to govern the creation and enforcement of cyberspace contracts and licenses.

Diff: 2

Skill:  Legal Concepts

LO:  9.5 Describe e-commerce and define e-contract.

AACSB:  Analytical thinking

Classification:  Concept

 

------

Free Business Ethics Resources

1. See full list of videos: 

Link 1 - Youtube channel www.youtube.com/ecomftu2012

Link 2 - Youtube channel 

2. Free Business Ethics - 2016 Ebooks (free download)

Legal Environment of Business: Online Commerce, Ethics, and Global Issues, 8th Edition, 2016, Henry R. Cheeseman

REVEL for Ethics and the Conduct of Business -- Access Card, 8th Edition, 2016, John R Boatright, Jeffery D. Smith

Business Ethics: Concepts and Cases, 7th Edition, 2012, Manuel G. Velasquez, Santa Clara University

 

3. Link to power point slides (Free Download)

REVEL for Ethics and the Conduct of Business -- Access Card, 8th Edition, 2016, John R Boatright, Jeffery D. Smith

LINK DOWNLOAD FREE PPT - LINK

Legal Environment of Business: Online Commerce, Ethics, and Global Issues, 8th Edition, 2016, Henry R. Cheeseman

LINK DOWNLOAD FREE PPT - LINK

Business Ethics: Concepts and Cases, 7th Edition, 2012, Manuel G. Velasquez, Santa Clara University

4. Test Bank - Free download

Legal Environment of Business: Online Commerce, Ethics, and Global Issues, 8th Edition, 2016, Henry R. Cheeseman

Link - Test bank - free download 

REVEL for Ethics and the Conduct of Business -- Access Card, 8th Edition, 2016, John R Boatright, Jeffery D. Smith

Link - Test bank - free download

 

For Test Bankz, Quiz Answers and Case study Guides, email to: This email address is being protected from spambots. You need JavaScript enabled to view it.

 

Good Luck and Success, Enjoy Your Study !

 

----------

 

       

 

Business Ethics 2016, Lecture, Video, Case Study Guides and Quiz, Test Bank, Free Download
------
Revel for Ethics and the Conduct of Business, 8th Edition, 2016, John R Boatright, Jeffery D. Smith
Legal Environment of Business: Online Commerce, Ethics, and Global Issues, 8th Edition, 2016, Henry R. Cheeseman
Business Ethics: Concepts and Cases, 7th Edition, 2012, Manuel G. Velasquez, Santa Clara University

------
1. Ethics in the World of Business
2. Ethical Decision Making
3. Ethical Theories
4. Whistle-Blowing
5. Business Information and Conflict of Interest
6. Privacy
7. Discrimination and Affirmative Action
8. Employment Rights
9. Health and Safety
10. Marketing and Advertising
11. Ethics in Finance
12. Corporate Social Responsibility
13. Governance, Accountability, and Compliance
14. International Business Ethics
------
Part I: Legal and Ethical Environment

1. Legal Heritage and the Digital Age
2. Ethics and Social Responsibility of Business
3. Courts, Jurisdiction, and Administrative Law
4. Judicial, Alternative, and E-Dispute Resolution

Part II: Constitution and Public Law
5. Constitutional Law for Business and E-Commerce
6. Torts and Strict Liability
7. Criminal Law and Cyber Crimes
8. Intellectual Property and Cyber Piracy

Part III: Contracts, Commercial Law, and E-Commerce
9. Formation and Requirements of Contracts
10. Performance and Breach of Contracts
11. Digital Law and E-Commerce
12. UCC Sales Contracts, Leases, and Warranties
13. Credit, Secured Transactions, and Bankruptcy

Part IV: Business Organizations, Corporate Governance, and Investor Protection
14. Small Business, General Partnerships, and Limited Partnerships
15. Limited Liability Companies, Limited Liability Partnerships, and Special Forms of Business
16. Corporations and Corporate Governance
17. Investor Protection and E-Securities Transactions

Part V: Agency, Employment, and Labor Law
18. Agency Law
19. Equal Opportunity in Employment
20. Employment Law and Worker Protection
21. Labor Law and Immigration Law

Part VI: Government Regulation
22. Antitrust Law and Unfair Trade Practices
23. Consumer Protection
24. Environmental Protection
25. Real Property and Land Use Regulation

Part VII: Global Environment
26. International and World Trade Law

Part VIII: Accounting Profession
27. Accountants’ Duties and Liability
------
PART ONE Basic Principles

Chapter 1 Ethics and Business
Introduction
1.1 The Nature of Business Ethics
ON THE EDGE: Was National Semiconductor Morally Responsible?
1.2 Ethical Issues in Business
ON THE EDGE: A Traditional Business
1.3 Moral Responsibility and Blame
ON THE EDGE: WorldCom’s Whistleblower
ON THE EDGE: Gun Manufacturers and Responsibility
CASES FOR DISCUSSION
Slavery in the Chocolate Industry
Aaron Beam and the HealthSouth Fraud

Chapter 2 Ethical Principles in Business
Introduction
2.1 Utilitarianism: Weighing Social Costs and Benefits
2.2 Rights and Duties
ON THE EDGE: Should Companies Dump Their Wastes In Poor Countries?
ON THE EDGE: Working for Eli Lilly & Company
ON THE EDGE: Conflict Diamonds
ON THE EDGE: ExxonMobil, Amerada Hess, and Marathon Oil in Equatorial Guinea
CASES FOR DISCUSSION
Traidos Bank and Roche’s Drug Trials in China

PART TWO The Market and Business

Chapter 3 The Business System: Government, Markets, and International Trade
Introduction
3.1 Free Markets and Rights: John Locke
3.2 Free Markets and Utility: Adam Smith
3.3 Free Trade and Utility: David Ricardo
3.4 Marx and Justice: Criticizing Markets and Free Trade
ON THE EDGE: Commodification or How Free Should Free Markets Be?
ON THE EDGE: Marx’s Children
3.5 Conclusion: The Mixed Economy, the New Property, and the End of Marxism
ON THE EDGE: Napster’s Lost Revolution
ON THE EDGE: Brian’s Franchise
CASES FOR DISCUSSION
The GM Bailout Accolade versus Sega

Chapter 4 Ethics in the Marketplace
Introduction
4.1 Perfect Competition
4.2 Monopoly Competition
ON THE EDGE: Drug Company Monopolies and Profits
4.3 Oligopolistic Competition
4.4 Oligopolies and Public Policy
ON THE EDGE: Fixing the Computer Memory Market
ON THE EDGE: Oracle and Peoplesoft
CASES FOR DISCUSSION
Intel’s “Rebates” and Other Ways It “Helped” Customers
Archer Daniels Midland and the Friendly Competitors

PART THREE Business and Its External Exchanges: Ecology and Consumers

Chapter 5 Ethics and the Environment
Introduction
5.1 The Dimensions of Pollution and Resource Depletion
5.2 The Ethics of Pollution Control
5.3 The Ethics of Conserving Depletable Resources
ON THE EDGE: Ford’s Toxic Wastes
ON THE EDGE: The Auto Companies in China
ON THE EDGE: Exporting Poison
CASES FOR DISCUSSION
The Ok Tedi Copper Mine
Gas or Grouse?

Chapter 6 The Ethics of Consumer Production and Marketing
Introduction
6.1 Markets and Consumer Protection
6.2 The Contract View of Business Firm’s Duties to Consumers
6.3 The Due Care Theory
ON THE EDGE: The Tobacco Companies and Product Safety
6.4 The Social Costs View of the Manufacturer’s Duties
ON THE EDGE: Selling Personalized Genetics
6.5 Advertising Ethics
ON THE EDGE: Advertising Death to Kids?
ON THE EDGE: New Balance and the “Made in USA” Label
6.6 Consumer Privacy
CASES FOR DISCUSSION
Becton Dickinson and Needle Sticks
Reducing Debts at Credit Solutions of America

PART FOUR Business and Its Internal Constituencies

Chapter 7 The Ethics of Job Discrimination
Introduction
7.1 Job Discrimination: Its Nature
ON THE EDGE: Helping Patients at Plainfield Healthcare Center
7.2 Discrimination: Its Extent
7.3 DISCRIMINATION: UTILITY, RIGHTS, AND JUSTICE
7.4 Affirmative Action
ON THE EDGE: Driving for Old Dominion
ON THE EDGE: Peter Oiler and Winn-Dixie Stores
CASES FOR DISCUSSION
Should Kroger pay now for what a Ralphs’ Employee did in the Past
Wal-Mart’s Women

Chapter 8 Ethics and the Employee
Introduction
8.1 The Rational Organization
8.2 The Political Organization
8.3 The Caring Organization
ON THE EDGE: HP’s Secrets and Oracle’s New Hire
ON THE EDGE: Insider Trading or: What Are Friends For?
ON THE EDGE: Delivering Pizza
ON THE EDGE: Sergeant Quon’s Text Messages
ON THE EDGE: Employment at Will at Howmet Corporation?
CASES FOR DISCUSSION
Death at Massey Energy Company
Who Should Pay?
------
key words
Ethics,
Ethical Decision Making,
Ethical Theories,
Whistle-Blowing,
Conflict of Interest,
Privacy,
Discrimination, Affirmative Action,
Employment Rights,
Health and Safety,
Ethics in Finance,
Corporate Social Responsibility,
Governance, Accountability, Compliance,
International Business Ethics,

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